This seems like a slightly extended htmlentities(nl2br($input)) (if done in php). handy in those times you need stuff converted so it'll output the same way as what you are pasting in.
It's pretty configurable, and outputs something like this (both the pastebin and linked paste make use of it):
I would just prefer to wrap my code with <pre></pre> instead of using a whitespace generator which makes pain in the ass to make modifications on the code.
Edit: you mean, show a rendering of the output in the page?
Edit: actually, never mind. The UI is fine for its intended use.
With the #+BEGIN_SRC tag you can automatically get an export of code set by the emacs-mode for that language, in addition to markup for other text.
I don't see why you feel a need to call it useless, just because it doesn't apply to markdown.